rins 


WILLIAM  GIBBS  McADOO 
The  second  liberty  loan 


WM 


6")TH   CONGRESS  I 

1st  Session       i 


SENATE 


IRS'T 

LOS  ANGEUE9^-  112 


STATE  NORMAL  SCHOOL 


THE  SECOND  LIBERTY  LOAN 

AND  THE  CAUSES  OF  OUR  WAR  WITH  GERMANY 


ADDRESS 


OK 


■ 


Hon.  W.  G.  McADOO 

SECRETARY  OF  THE  TREASURY 

DELIVERED  AT  THE  ANNUAL  CONVENTION  OF  THE 

AMERICAN  BANKERS'  ASSOCIATION, 

AT  ATLANTIC  CITY,  N.  J. 


September  28,  1917 


G# 


PRESENTED  BY  MR.  SHAFROTH 
SEPTEMBER  29,  1917.— Ordered  to  be  printed 


WASHINGTON 

GOVERNMENT  PRINTING  OFFICE 

1917 


THE  SECOND  LIBERTY  LOAN  AND  THE  CAUSES  OF  OUR 
WAR  WITH  GERMANY. 


Mr.    GOEBEL    AND    GSNTLEKEN     01     Mil     AMERICAN     Mam.  JOCIATION  !       It 

would  be  difficult  for  me  to  express  adequately  to  yon  my  gratitude  tor  the 
pouh  introduction  of  your  president  and  Cor  the  cordiality  of  this  reception. 

i  should  like  to  repeal  here  whal  r  said  In  Kansas  <'ity,  Cans.,  Mr.  Goebel's 
honte  tov  n,  when  I  bad  the  pleasure  of  speaking  then  on  the  Qrsl  Liberty  Loan. 
I  should  like  to  testit%\  here,  as  I  did  there,  to  my  admiration  of  the  sturdy  and 
virile  patriotism  <>f  tliis  adopted  citizen  of  the  Onited  States.  He  Is  a  man 
whose  unswerving  Integrity  of  character,  unbending  courage,  and  love  for 
America  bave  sel  an  example  t<>  men  even  of  native  birth.  1  would  that  some 
men  who  claim  to  have  been  born  American  citizens  could  be  infected  with  bis 
splendid  qualities  <>i'  patriotism. 

It  is  a  ureal  pleasure,  gentlemen,  to  ineel  you  here  in  this  convention,  and 
to  thank  you  in  person,  and  to  express  to  you  mj  deep  appreciation  of  the 
lance  that  the  American  bankers  bave  given  to  the  Treasury  Department 
during  ibis  last  year  of  stress  and  trial.  The  responsibilities  of  that  depart 
men(  ran  not  in  discharged,  my  friends,  without  your  support  ami  without  the 
sin. jioii  o!  every  American  citizen.  We  lace  a  time  in  the  history  of  America 
when,  with  the  cooperation  of  everyone,  the  humbles)  as  well  as  the  highest, 
we  can  do  the  impossible.     Hut  without  that  kind  of  support,  without  seeminglj 

alted  patriotism  animating  at  all  times  the  people,  and  animi 
particularly    men    of  your   stamp   and    character,    who    must    he    load"i-s    in    the 
business  life  of  your  respective  communities,  these  great  tasks  can  nol  be  per- 
formed.    1  know,  however,  that  the  American  people  will  respond  to  the 
of  their  country,   that   they  intend  to  make  America    more  than   she  lias  ■ 
been   in  her  history — regnant  for  right,  for  justice,  for  democracy   throughout 
the   world. 

1  would  also  take  advantage  of  this  occasion  to  express  my  appreciation  of 
the  splendid  work  the  American  bankers  did  in  helping  to  provide  that  monu- 
mental fund  of  mercy,  the  Med  Cross  war  fund.  You  not  only  contributed  your 
money,  but  your  services,  and  you  had  the  opportunity — and  you  discharged 
it    well     of   rendering  another   great   and   creditable   service   to'  your   country. 

The  credit  of  the  Federal  r.overuinent  throughout  its  history  has  been  main- 
tained inviolate:  its  obligations  bave  always  been  scrupulously  observed 
engagements  have  always  been  honorably  fulfilled.  The  national  credit  is  the 
fir>t  bulwark  of  defense  of  the  Nation's  rights.  If  that  credit  be  impaired,  the 
whole  economic  and  financial  structure  of  the  country  is  imperiled.  Finance 
is  so  fundamental  to  war  that  the  first  duty  of  every  nation  upon  the  outbreak 
of  hostilities  is  to  conserve  its  financial  resources  and  to  make  the  national 
credit    Impregnable  and  sufficient  for  all  the  purposes  of  the  war. 

In  all  of  the  great  financial  operations  in  which  the  Cxovornmont  has  been 
engaged  in  the  past,  and  in  all  of  those  in  which  it  must  engage  in  the  future 
the  American  banker  must  because  of  his  knowledge,  experience,  ability,  and 
influence,  become  the  first  line  of  defense  and  offense.  His  thorough  coopera- 
tion with  the  Government  relieves  the  task,  however  stupendous,  of  any  doubt. 
To  you.  the  patriotic  bankers  of  America,  has  conie  a  great  responsibility  am! 
a  great  opportunity — the  responsibility  of  helping  your  Government  solve  it< 
huge  financial  problems  sine;,  study  and  the  opportunity  to  serve  your  country 
in  ways  peculiarly  useful  and  effective  at  this  time. 

THE    CAUSES    01     rHE     WAS. 

It   is  perhaps  important    that    the   reasons   why    we   are  at    war    with   Germany 

should  be  restated   as  often   as   possible.      There   are   some   noisy    agitators   and 

disloyal   writers  in  this  country   who   have  persistently    endeavored   to   confuse 

the  issue  and  to  carry  on  a  seditious  and  subtle  propaganda  for  the  purpose  of 

88293"— 17  3 


45i.(» 


4  THE   SECOND   LIBERTY    LOAN. 

producing  discontent  among  the  people  and  of  giving  aid  and  encouragement  to 
the  enemies  of  the  United  States.  A  large  part  of  this  propaganda  was  un- 
doubtedly financed  by  the  German  Government  directly,  from  the  outbreak  of 
the  European  war,  August,  1914,  until  America  entered  the  war,  April  6,  1917. 
Much  of  this  same  propaganda  has  probably  been  carried  forward  since  America 
entered  the  war  by  German  money  left  in  the  United  States  for  that  purpose 
by  Von  Bernstorff,  the  adroit  and  malevolent  German  ambassador,  before  he 
was  dismissed.  With  that  money  and  with  money  provided  by  German  sym- 
pathizers and  certain  disloyal  elements  in  the  United  States  the  propaganda 
has  continued,  but  in  a  modified  form.  It  would  be  difficult  to  ascertain  ex- 
actly how  much  money  has  been  expended  for  this  purpose,  but  some  of  the 
recent  disclosures  by  the  State  Department  indicate  bow  active  were  Germany's 
own  representatives  while  in  this  country.  It  is  well  for  the  American  people 
to  realize  the  hypocrisy  and  disloyalty  of  all  these  efforts,  and  to  determine  to 
stamp  them  out  relentlessly  and  remorselessly,  because  the  interests  of  the  Na- 
tion must  at  no  time  be  imperiled  more  by  the  traitors  within  our  walls  than  by 
the  enemies  without. 

It  has  been  repeatedly  stated  that  America  entered  this  war  to  make  liberty 
and  democracy  secure  throughout  the  world.  While  that  is  true,  it  must  always 
be  remembered  that  America  entered  the  war  for  a  more  immediate  reason. 
Noble  and  idealistic  as  is  her  championship  of  universal  democracy,  she  entered 
this  war  primarily  because  of  the  persistent  insults  and  aggressions  of  Germany, 
the  wanton  disregard  of  American  rights  within  our  own  borders  as  well  as  upon 
the  high  seas,  the  contemptuous  violation  of  international  law,  and  the  ruthless 
destruction  of  American  life  and  property. 

WANTON   MI'EDEK  AND  DESTITUCTION  ON  THE  HIGH   SEAS. 

Before  this  war  broke  out,  every  civilized  nation  accepted  and  honored  the 
rule  that  in  time  of  war  a  merchant  vessel,  neutral  or  belligerent,  should  not  be 
sunk  by  an  enemy  war  vessel  unless  the  lives  of  the  passengers  and  crew  were 
first  made  safe.  Under  this  long-observed  law  an  American  citizen  had  the  right 
to  travel  upon  a  British  or  a  French  merchant  ship  with  the  full  knowledge  that 
that  ship  would  not  be  sunk  by  a  German  war  vessel  until  the  passengers  and 
crew  were  taken  from  the  ship  and  their  safety  secured.  Civilized  warfare  has 
always  respected  the  lives  of  noncombatants. 

If  a  German  regiment  should  capture  a  French  town  or  city,  and,  while 
marching  through  the  streets,  should  fire  upon  a  crowd  of  unarmed  and  helpless 
men,  women,  and  children,  killing  a  great  number  of  them,  crippling  and  wound- 
ing others,  the  whole  world  would  gasp  with  horror ;  and  yet  this  would  be  far 
less  inhuman  than  to  sink  a  ship  at  sea  containing  noncombatant  men,  women, 
and  children,  because  on  land  those  who  are  wounded  may  be  rescued,  taken  to 
the  hospitals,  and  saved,  while  many  who  are  not  hit  by  bullets  may  actually 
escape.  The  reason  the  rule  of  the  sea  has  always  been  rigidly  enforced  by 
every  civilized  nation  is  that  if  you  sink  an  unarmed  ship  without  giving  the 
noncombatants  a  chance  to  escape,  they  are  thrown  into  the  water  and  all  must 
perish.  There  is  no  chance  for  the  wounded  or  the  uninjured  to  escape.  The 
remorseless  sea  engulfs  them  all  and  obliterates  life  "  without  a  trace."  What, 
therefore,  would  be  a  crime  of  the  first  order  in  the  killing  of  noncombatants  on 
land  is  a  crime  of  colossal  and  inexcusable  proportions  when  it  is  committed 
upon  the  high  seas. 

Yet  this  is  exactly  what  Germany  has  done  consistently  since  the  outbreak  of 
the  war.  She  has  destroyed  merchant  vessels  on  the  high  seas  without  warning, 
killing  noncombatant  men,  women,  and  children  without  mercy  and  in  the  most 
brutal  and  ruthless  fashion,  in  defiance  of  all  international  law  and  every  ac- 
cepted rule  of  humanity  and  civilization. 

The  rights  of  Americans  upon  the  high  seas  have  been  wantonly  disregarded. 
It  is  not  an  answer  to  say  that  Americans  should  not  have  sailed  on  merchant 
ships  bearing  the  British  or  the  French  flag.  They  had  a  right  to  sail  on  those 
vessels,  and  were  compelled  to  sail  on  them  because  there  were  not  enough  mer- 
chant ships  under  the  American  flag  to  furnish  transportation  for  American  busi  • 
ness  men,  American  consular  and  diplomatic  officers,  and  others  engaged  in  peace- 
ful and  rightful  pursuits  to  go  upon  their  legitimate  errands.  They  were  forced 
to  sail  under  foreign  Hags  and  were  entitled  to  the  protection  accorded  by  univer- 
sally accepted  international  law  and  the  mandates  of  civilization  and  humanity, 
viz.  that  the  ships  would  not  be  sunk  by  an  enemy  vessel  until  the  safety  of 
passengers  and  crew  was  first  assured. 


THE    SECOND    LIBEBTY    LOAN. 


PIJSDGES    iln!    ITEU    VVI1  il    IMPUNITY. 


On  September  I,  L915,  the  German  Government  gave  the  following  assurance 
to  the  United  States : 

"Liners  will  not  be  Mink  by  submarines  without  warning  and  with. nit  gafetj 
of  the  lives  of  Doncombatants,  provided  thai  the  liners  do  aol  try  to  escape  or 
offer  resistance." 

Tiiis  promise  was  promptly  violated.  <>n  October  15,  six  weeks  thereafter, 
the  British  steamship    Irabie  wafl  Mink  and   three  American   i  lost 

The  German  Government  said  to  the  United  States: 

"The  Imperial  German  Government  regrets  and  disavows  the  act  and  bus 
aotlfled  Commandei   Schneider  accordingly." 

Scarcelj  bad  this  assurance  i><  en  received  before  the  Italian  steamer  Atu 
was  torpedoed  without  warning  and  seven  American  lives  were  destroyed 
the  L".ith  of  November,  1915,  the  American  vessel    William   I'.  Frye  was 
in  violation  of  Internationa]  law.    Following  that,  attacks  were  made  upon 
era]  American  vessels  In  gross  violation  of  these  promises,  and  on  Decembi 
the  British  liner  Persia  was  sunk  In  the  Mediterranean  without  warning  and 
more  than  .'Iiki  passengers  and  members  of  the  crew  were  lost,  among  them 
being  an  American  consul  traveling  to  ids  post     This  American   consul  was 
obliged  to  sail  on  this  British  vessel  because  there  was  do  American  vessel  upon 
which  be  could  travel,  and  he  was  killed  while  In  the  line  of  duly,  tx  aring  upon 
bis  person  the  Haur  of  the  American  Republic.    He  was  entitled  to  pr< 
under  international  law,  as  well  as  under  the  repeated  assurances  of  the 
Government. 

On  January  7.  1016.  the  German  Government  again  assured  the  United  SI 
that  German  submarines  in  the  Mediterranean  would  not  sink  em  hant 

vessels,  except  In  accordance  with  the  general  principles  of  Internationa]  law, 
and  "only  after  passengers  and  crews  had  been  accorded  safety."     0 
ary  it'..  1916,  the  German  Government  said  to  the  United  Stab 

"Germany  has  limited  her  submarine  warfare  because  of  her  long-standing 
friendship  with  the  United  Stales,  and  because  by  the  sinking  of  the  i 
which  caused  the  death  of  citizens  of  the  United  States,  the  Gei   oan  r 
affected  neutrals,  which  was  not  the  intention,  as  retaliation  should  be  confined 
to  enemy  subjects." 

The  German  Government  promptly  proceeded  to  disregard  aces, 

sinking  numerous  ships  without  warning,  injuring  a  number  of  A  citi- 

and  Imperiling  the  lives  of  many  more.    Whereupon  the  Ami  . 
tuetit  notified  the  German  Government  on  the  18th  of  April,  1911  onths 

the;  ■•■      tei",    t  ll.'U  — 

"If  it  is  still  (he  purpose  of  the  Imperial  German  Government  to  prosecute 
relentless  and  indiscriminate  warfare  against  vessels  of  commerce  by  thi 
of  submarines,  without   regard  to  what  the  Government  of  the 
must   consider  the  sacred  and  indisputable  rules  of  interna':  id  the 

universal  1  tized   dictates  of  humanity,  the  Government  of  the   United 

States  is  at   last   forced  to  the  conclusion  that  there  is  but  one  course  I 
pursue     I  uless  the  Imperial  Government  should  new  immediately   declare  and 
effeel   an  abandonment   of  its  present   methods  of  submarine  warfare  against 
passenger  and  freight  carrying  vessels,  the  Government  of  the  United  States  can 
have   do  choice   but    to   sever   diplomatic   relations   with   the   German   Em 
altogt  i  her." 

Whereupon   the  German  Government,  on  the  4th  of  .May,   1916,   about  two 
weeks    thereafter,    gave    definite    assurances    to    this    Government    that 
orders  had  been  issued  h>  German  naval  officers  "in  accordance  with  the 
era!    principles  of   visit   and   search    in   the   destruction   of   merchan 
sized  by  international  law." 

in.  and  in  spite  of  these  repeated  assurances,  the  German  < lovernment  pro- 
ceeded  to  sink   merchant    vessels  without   warning  and   without   securing  the 
of  the  lives  of  passengers  and,  crew.     One  American  was  killed  on  the 
h   steamer  CabOskO;  on  October  _'<i.    1916,  8   Americans   were  killed  on   the 
British   steamer   Marina,   October   28,    1916,    IT    Americans   were   killed   on    the 
British  steamship  Russia,  December  l  I    1916. 

DIPLOMATIC    RELATIONS    SEVERED. 

On  January  31,  1917,  the  German  Government  gave  this  notice  to  take  effect 
the  following  day  : 

41  Germany  will  meet  the  Illegal  measures  of  her  enemies  by  forcibly  prevent- 
ing in  a  zone  around  Great  Britain,  France.  Italy,  and  In  the  eastern  Mediter- 


6  THE    SECOND    LIBERTY    LOAN. 

ranean,  all  navigation,  thai  of  neutrals  included,  from  and  to  England,  from  and 
to  France,  etc.     All  ships  mel  within  that  zone  will  be  sunk." 

Whereupon  the  United  States  on  February  3,  three  days  afterwards,  severed 
diplomatic  relations  with  the  German  Government  in  the  following  statement: 

"In  view  of  this  declaration  which  withdraws  suddenly  and  without  prior  inti- 
mation the  solemn  assurance  given  in  the  Imperial  Government's  note  of  -May  4, 
1916,  this  Government  has  no  alternative  consistent  with  the  dignity  and  honor 
of  the  United  States  but  to  take  the  course  which  it  explicitly  announced  in 
its  note  of  April  18,  1916,  that  it  would  take  in  the  event  that  the  Imperial  Gov- 
ernment did  not  declare  and  effect  an  abandonment  of  the  methods  of  submarine 
warfare  then  employed  and  to  which  the  Imperial  Government  now  purposes 
again  to  resort." 

All  diplomatic  relations  between  the  United  States  and  the  German  Empire 
were  thereupon  severed,  the  American  ambassador  at  Berlin  was  immediately 
withdrawn,  and  the  German  ambassador,  Von  Bernstorff,  was  given  his-  pass- 
ports. 

Between  February  3  and  April  1,  1917,  almost  two  months,  1  American  was 
killed  on  the  British  steamship  Eavston,  10  Americans  were  killed  on  the  Brit- 
ish steamer  Yedamore,  1  American  was  killed  on  the  British  steamship  Torino, 
1  American  was  killed  on  the  French  steamer  Athas,  8  Americans  were  killed 
on  the  British  steamship  Laconia,  1  American  was  killed  on  the  Norwegian 
steamship  Sjostad,  5  Americans  were  killed  on  the  American  steamship  Vigi- 
landa,  7  Americans  were  killed  on  the  American  steamship  Healdton,  and  19 
Americans  were  killed  or  missing  from  the  British  steamship  Crispin.  Besides 
this,  seven  American  steamships  were  sunk  by  German  submarines  in  these  two 
months,  but  no  Americans,  except  live  on  the  Yinihnuio.  were  killed. 

Moreover,  the  British  steamer  Yarrotvdale  was  captured  by  a  German  aux- 
iliary cruiser  prior  to  our  entry  into  the  war,  and  72  American  citizens  were 
taken  as  prisoners  of  war  by  Germany,  which  was  a  clear  violation  of  American 
rights.     They  were  maltreated  and  abused  and  subsequently  released. 

The  crowming  act  of  infamy  in  Germany's  ruthless  policy,  however — and  I 
mention  it  last,  although  it  was  the  first  in  occurrence — was  the  sinking  on  May 
7.  1915,  of  the  British  steamship  Lusitania,  an  unarmed  passenger  vessel,  and 
the  killing  of  114  American  citizens — men,  women,  and  children. 

Each  and  every  American  life  and  each  and  every  American  vessel  destroyed 
by  Germany  during  these  two  years  was  an  act  of  war  upon  the  American  peo- 
ple, the  consequences  of  Which  were  avoided  from  time  to  time  by  the  plausible 
assurances  and  excuses  of  the  German  Government,  each  and  every  one  of  which 
was  perfidiously  and  insincerely  made,  and  each  and  every  one  of  which  was 
deliberately  disregarded. 

GERMAN   INTBIGTTE  AND  PERFIDT. 

But  this  is  not  all.  Germany,,  while  professing  friendship  for  America,  and 
while  her  ambassador,  her  representatives,  and  her  citizens  were  enjoying  our 
hospitality  and  receiving  our  protection,  was  plotting  against  the  domestic 
security  of  the  United  States  by  blowing  up  munitions  plants,  fomenting 
strikes  and  disturbances  in  the  labor  world,  disseminating  false  information 
arid  poisoning  the  minds  of  the  American  people  against  their  own  Govern- 
ment, plotting  its  downfall,  and  seeking  to  influence  our  Congress,  as  evidenced 
by  Von  Bernstorff's  dispatch  of  January  22,  19L7,  to  the  Berlin  foreign  office, 
in  which  he  said :  "  I  request  authority  to  pay  up  to  $50,000  in  order,  as  on 
former  occasions,  to  influence  Congress  through  the  organization  you  know  of, 
which  can  perhaps  prevent  war."  And  while  Von  Bernstorff  was  busy  upon 
our  own  shores  with  intrigue  through  his  spy  system  and  through  the  corrupt 
use  of  money  to  influence  public  opinion  and  the  national  policies  of  the 
American  people,  Zimmermann,  the  foreign  secretary  in  Berlin,  had  sent  a  dis- 
patch to  Mexico  urging  her  to  make  war  upon  the  United  States  and  begging 
Mexico  to  invite  Japan  to  join  her  in  this  dastardly  work,  promising  Mexico 
that  California,  Arizona,  New  Mexico,  and  Texas  would  be  restored  to  Mexico 
in  the  event  of  success.  What  more  perfidious  conduct  could  have  character- 
ized the  government  of  any  nation  with  wmich  we  were  at  peace?  What  must 
be  the  judgment  upon  a  government  capable  of  such  infamies?  And  yet  there 
are  those  who  undertake  to  defend  Germany  and  to  say  that  the  American 
people  did  not  have  sufficient  grounds  upon  which  to  enter  this  war. 

Why.  my  friends,  if  there  is  an  American  who.  knowing  this  record,  says 
deliberately  that  America  did  not  have  ample  provocation  or  justification  for 


1  J)  l.    BE<  "M>    i  iiu.i;  l  J     loan.  7 

.his  war,  that  it  was  aot  essential  to  protect  America's  Integrity  and  honor, 
then  yellow  blood  runs  in  ids  reins;  there  la  not  a  drop  of  the  red  blood  ol  our 
ancestors  in  1dm. 

ii'  there  be  a  man,  woman,  or  child  In  America  who  has  the  slightest  doubt 
about  the  rectitude  of  your  Government,  I  wanl  them  to  know  this  record,  to 
realize  the  patience  and  forbearance  under  the  mosl  extreme  provocation  of 
your  noble  President—]  wanl  them  to  know  thai  record,  because,  knowing  it, 
they  <-;m  look  any  man  In  the  face,  thej  can  face  their  God,  with  the  i  i  u 
that  America  went  to  the  utmost  Hunt  in  it>  endeavor  to  preserve  an  bono 
peace. 

The  outrages  committed   upon   American   rights   through   ■ 
structlon  of  American  life  and  propertj  during  the  years  1915,  1916,  an< 
were  provocation  enough,   i>ui    when   the  German   Government    under 
Its  em  ,  i    1917,  to  mark  off  hundreds  of  miles  of  the  higl 

surrounding  Great  Britain,  France,  and  Italy,  and  to  declare  that  ll   ■■ 
on  sight  every  American  vessel  which  entered  these  prohibited  waters, 
in  pursuance  of  lawful  commerce    and  of  International  right,  and  actui 
ceeded  to  carry  out  the  threat,  there  wa  left  for  Amerl* 

M  or  else  submit  to  this  tyrannical  and  tnonstrou 
military  despot. 

!  POSSIBLE. 

We  chose  to  fight— and  why?    Because,  first,  national  honor  and  self- 
Imperatively  demanded  it,  and.  second,  because  we  can  never  concede  the 
of   any    nation,    however    powerful,    to    order    American    vessel      and 
citizens  to  keep  off  the  high  seas  and  prevent  America  from  selling  her 
products  of  the  farm,  the  factory,  and  the  mine  to  other  nations 

If   we   had    tamely   submitted    to   thai    order    it    would    have   brou 
and  ruin  to  the  American  people.     Not  only  would  it  have  '■•■  ■ 

to  their  honor,  self-respect,  and  standing  as  a  nation,  but  it  would  hav(    ■ 
irreparable  injury,  loss,  and  suffering  to  our  people.     If  an. 
this   war  could   with  impunity  order  vessels  of  the  United 
of  any   portion  of  the  high  seas,  which  are  the  common   property   o 
nations  of  the  earth,  and  if  we  had   submitted,   we  would   have  i 
fateful   precedent     In   a   future   war   some  other   nation    might    concl  idi 
American    vessels  carrying   American    citizens   and    American   commerce    Should 
be    Ordered    Off    Of    some    other    portion    of    the    high    seas,    and    we    v 
obliged  to  submit  or  to  fight  under  all  of  the  disadvantages  of  havinj 
in  the  first  instance.     If  we  had  been  submissive,  it  would   not   b 
next  step  for  the  nation  which  ordered  us  off  of  500  mil<  -  of  the  Atlai 
io  order  OS  to  Keep  off  the  entire  Atlantic  Ocean  except  that  part    withit 
from    our   own    shores,    over    which    we    have   acknowledged    jurisdlcti 
could  never  submil  t"  such  a  destruction  of  our  vital  rights. 

AGKIcn.Tfct,  AND  OTHEB    [NDUSTBIE8   THKEATENED. 

On  the  material  side  the  disaster  of  submission  is  most  striking.     Th< 
order  forbade  our  ships  from  carrying  our  people  and  our  commerce    t-    • 
Britain,   France,  and  Italy.     Our  prosperity   and  our   welfare  as 
Inseparably  connected  with  our  right  of  free  and  unmolested  intercourse  with 
those    nations.      In    the    fiscal    year    1917    our    total    exports    to    G  lain. 

France,  Belgium,  and  Italy  were  s:'..4.".T.000.000,  in  round  numbers;  in  1916  they 

$2,247,000,000,   in  round   numbers.     Our  exports  to  those  countries  con- 
stltute  more  than  one-half  of  our  expert   trade  with  the  entire  world.     Tl 
exports  represent  the  surplus  products  of  our  farms,  of  our  mines,  of  oui 
tories.     If  we  are  denied  a  market  for  them,  these  farm  products  would  ro 

waste  upon  our  own  soil,  the  production  of  our  mines  and  factories  w 
he  greatly  reduced,  labor  would  be  thrown  out  of  employment,  stagnation  of  In- 
dustry would  result,  and  suffering  and  want   would  stalk  in  the  land.      Our  pro- 
duction  always  has  exceeded    the   home  demand,   and    if  we  are   denied    foi 
markets  and  attempt  to  sell  the  whole  of  our  products  at  home,  the  result 
be  demoralized  prices,  with  returns  far  below  (he  cos'   ,,f  production,  and  c< 
quent    injury   to  every   man.   woman,   anil   child   in   America.      No  one   more   than 
our  farmers,  the  grain  growers  and  the  cotton  growers  particularly,  would  ' 
injured  by  obedience  to  the   Kaiser's  order.      While  our  export    trade   would   be 
destroyed,  our  import  trade  would  disappear.     Certain  imports  are  essential   to 
our  national  life  ami  existence.     "We  must  have  them,  and  we  can  never  submit 
to  any  tyrant  who  forbids  us  to  sail  the  hi^h  seas  in  the  peaceful  pursuit  of  our 


8  THE   SECOND   LIBERTY   LOAN. 

legitimate  Interests  and  In  the  unmolested  enjoyment  of  the  rights  we  won  by 
the  blood  and  courage  of  our  ancestors: 

If  we  bad  yielded  to  this  insolent  order  signed  by  the  Kaiser  in  his  palace 
in  Berlin,  he  would  have  destroyed  by  one  stroke  of  his  pen  more  than  $3,400,- 
000,000  of  our  commerce,  and  American  vessels  and  American  citizens  would 
have  been  excluded  from  all  intercourse  with  the  great  and  friendly  nations 
Of  Great  Britain.  France,  and  Italy.  By  one  stroke  of  the  Kaiser's  pen  he 
would  have  accomplished  more  destruction  on  our  farms,  in  our  factories,  and 
in  our  mines  than  he  could  achieve  with  all  the  armies  and  navies  of  the  German 
Empire.  It  is  a  monstrous  edict,  and  it  would  be  a  monstrous  thing  for 
America  to  submit  to  it. 

And  so  we  had  to  fight  for  our  rights,  and  so  it  is  that  we  are  engaged  in  a 
righteous  war — a  war  which  we  intend  to  bring  to  a  successful  Issue  by  the 
organized  might  of  this  Nation.  We  intend  to  match  organization  against 
organization,  science  against  science,  American  skill  against  German  si  ill, 
American  valor  against  German  valor,  and  I  have  not  the  shadow  of  a  doubt 
thai  the  victory  will  be  complete,  that  America's  honor  will  be  vindicated, 
thai  America's  vital  rights  will  be  preserved,  that  peace  upon  a  stable  and  just 
basis  will  he  reestablished,  and  that  democratic  institutions  will  be  extended 
throughout  the  earth. 

MONEY  THE  FIRST  ESSENTIAL. 

When  war  comes  to  a  nation  the  first  essential  is  money.  We  must  keep  our 
soldiers  and  sailors  armed  and  equipped  with  the  best  that  money  can  buy 
and  American  skill  devise.  We  must  constantly  provide  them  with  necessary 
clothing  and  food;  we  must  pay  their  wages;  we  must,  as  a  humane  and  just 
Nation,  support  their  dependent  families  while  they  are  risking  and  giving 
their  very  lives  for  us;  we  must  supply  them  with  a  reasonable  amount  of  life 
insurance. 

The  first  duty  of  the  Nation  to  its  gallant  sons  who  go  forth  to  die  upon  the 
field  of  battle  to  protect  your  lives,  your  property,  and  your  honor  is  that  it 
shall  restitute  to  them  what  it  destroys  when  it  drafts  them  into  the  service 
of  their  country  or  when  they  volunteer  to  go  into  the  service  of  their  country. 
Do  you  realize  that  when  the  Government  reaches  out  its  hand  and  takes  the 
young  man  who  is  earning  $1,200,  $1,500.  $2,400,  $5,000  a  year,  more  or  less, 
it  not  only  says,  "You  must  put  your. life  in  the  balance  and  give  it,  if  need 
be,"  but  it  conscripts  that  man's  income  and  earning  power  down  to  $396  a 
year,  because  that  is  all  it  pays  to  a  soldier?  Not  only  that,  but  if  he  has 
loved  ones  at  home  whom  he  must  support,  can  you  imagine  his  emotions  when 
he  is  taken  out,  to  die  perhaps,  knowing  that  his  wife  and  his  babies  may 
starve  behind  him  or  be  dependent  upon  charity?  The  Nation  also  destroys 
the  insurability  of  that  man.  He  finds  instantly  that  no  matter  how  healthy 
his  sinews,  nor  how  strong  his  heart,  no  matter  how  good  a  risk  he  would  be 
in  peace  time,  he  can  get  no  insurance.  With  his  earning  power  reduced,  he 
is  at  the  same  time  unable  to  make  any  sort  of  insurance  provision  for  those 
dependent  upon  him.  Is  it  asking  too  much  of  the  generous,  just,  and  humane 
people  of  America  to  restitute  also  the  insurability  of  that  soldier,  to  give  him 
the  opportunity  of  buying  insurance  from  his  own  Government  at  reasonable 
rates,  so  that  he  may  make  the  last  loving  provision  that  every  man  should 
make  for  his  family  if  he  has  to  face  death?  The  House  of  Representatives 
has  answered  that  question  by  passing  the  war  insurance  bill  by  a  unanimous 
vote,  and  the  Senate,  I  am  satisfied,  will  soon  follow  suit;  so  that  our  brave 
defenders  will  go  forth  with  the  knowledge  that  everything  that  the  love, 
affection,  and  sense  of  justice  of  a  great  people  can  do  for  them  has  been  done. 

We  must  Increase,  strengthen,  and  maintain  our  Navy;  we  must  provide  a 
predominant  fleet  of  aeroplanes  and  air  fighters;  we  must  build  a  great  mer- 
chant fleet,  so  that  our  long  line  of  communication  with  our  gallant  soldiers  in 
France  may  be  maintained  and  our  commerce  carried  across  the  high  seas  in 
defiance  of  the  German  Kaiser  and  his  submarines;  we  must  succor  our  noble 
compatriots  in  arms — the  British,  the  French,  the  Italians,  the  Belgians,  and 
the  Russians — by  lending  them  money  with  which  they  can  buy  arms  and  food 
and  other  supplies  in  our  markets.  All  these  things  must  be  done  and  done 
quickly. 

The  money  that  We  are  raising  by  taxation  and  by  bond  issues  is  being  de- 
voted to  these  purposes,  and  to  no  other  purposes.  More  than  $1,000,000,000  of 
the  money  that  you  are  going  to  provide  this  fiscal  year  is  being  expended  or 
Will  be  expended  upon  your  Army,   upon  from  1,800,000  to  2,500,000  of  the 


THE   SECOND   LIBERTY    LOAN.  9 

bravest  and  the  most  gallant  soldiers  thai  ever  donned  the  uniform.    And  four 

Navy,  recruited  i<»  the  lull  with  brave  tars  under  whose  uniforms  beat  the  true 
hearts  of  American  freemen,  is  being  built  up,  equipped,  and  manned  with  this 

money. 

After  this  war  is  over  all  of  these  expenditures  will  not  be  lost,  because  the 
greal  fleet  of  merchant  ships  we  are  now  going  to  construe!  at  last  and  put  Into 
operation  will  give  American  commerce  the  one  thing  thai   it  lias  needed  all 

these  years.    We  shall  spend  more  than  $1,000,000,000  tor  merchant  ships. 

It   is  a    most    unhappy    fad   -and    I    allude    to   it    not    as   criticism    but   simply 

to  show  thai  11  Is  not  always  wise  to  form  hasty  judgments  upon  measures  that 
seem  at  the  moment  radical     it  Is  a  most  unhappy  fad  thai  when  we  endeavored 
in  September,   19]  l,  one  month  after  this  war  in  Europe  broke  out,  to  make 
the  beginnings  of  a   Governmenl    merchanl    marine  t<»   proted    our  conm 
and  our  people,  11   was  filibustered  to  death,  and  thai   it   was  only  after  the 

lapse  of  two  years  of  hard  struggle  that  a  bill  was  finally  passed.  Bui  ve  have 
gOl  the  MM  now.  and  we  have  go1  the  Shipping  Board,  and  we  have  gol  in" 
money.  American  skill  and  Ingenuity  are  giving  an  example  to  the  world  of 
what  an  aroused  nation  can  do.  We  are  going  to  turn  out  ships  and  more 
ships,  standardized  and  perfected,  and  put  them  on  the  high  sea-  with  more 
rapidity  than  has  ever  been  done  before  in  the  history  of  the  world. 

It  is  upon  the  Treasury  of  *he  United  States  that  every  demand  in  time 
of  war  focuses,  because  everything  goes  back  to  the  gold  pile.  I  should  like 
you  to  realize  that  every  dollar  that  is  paid  to  a  soldier,  every  pair  of  Bhoes 
he  puts  on  his  feet,  every  piece  of  clothing  he  wears,  every  gun  he  carries, 
every  cartridge  he  tires,  every  18-inch  shell  that  is  hurled  from  the  monster 
guns  of  our  battleships,  and  every  shovelful  of  coal  that  is  consumed  iii  their 
boilers,  everything  that  touches  this  war  and  involves  a  Government  expendi- 
ture, depends  Upon  the  money  in  the  United  States  Treasury. 

When  you  turn  on  the  electric  light  in  tins  building,  and  turn  it  on  in 
other  buildings  miles  from  here,  it  must  come  from  the  power  plant.  The 
strain  is  there,  and  unless  that  power  plant  is  constantly  supplied  with  fuel 
with  which  to  keep  those  lights  burning,  you  have  darkness.  And  so,  in  the 
same  way,  unless  you  keep  the  gold  pile  in  the  Treasury  of  the  United  States 
sufficient  for  the  demand,  unless  you  keep  it  so  large  and  so  ample  that  what- 
ever strain  your  Government  puts  upon  it  for  the  purposes  of  tins  war  will 
find  a  ready  response,  then  the  light  of  liberty  goes  out  in  the  world  and 
where  is  America? 

The  problem  of  the  American  Treasury  is  the  problem  of  the  American 
banker  and  the  problem  of  the  American  people;  it  is  the  problem  of  keeping 
the  Treasury  supplied  with  the  means  to  carry  forward  these  great  objects 
under  the  direction  of  the  Commander  in  Chief  of  the  Army  and  Navy  of 
the  United  States,  your  President,  whose  glorious  stand  for  America's  honor 
and  America's  rights,  for  justice,  civilization,  and  democracy  have  made  him 
one  of  the  greatest  of  the  world's  outstanding  figure-. 

The  problem  is  twofold:  To  supply  essential  credits  to  the  allied  Govern- 
ments, because  it  is  vital  to  the  cause  that  their  strength  and  credit  shall  be 
sustained;  and,  secondly,  to  meet  our  own  requirements. 

BETWEEN  $13,000,000,000  AND  $14,000,000,000   IN   BONDS. 

Roughly  speaking,  and  after  allowing  for  the  amount  of  revenue  to  be  raised 
by  taxation  for  the  fiscal  year  ending  June  30.  ibis,  we  shall  have  to  raise  by 
additional  bond  issues  between  thirteen  and  fourteen  billions  of  dollars.  Ir  is 
estimated  that  .$5,000,000,000  will  represent  additional  loans  to  the  allied  Gov- 
ernments, which,  in  turn,  will  give  us  their  obligations  hearing  interest.  This 
$5,000,000,000  will  not,  therefore,  represent  expenditures ;  it  will  represent 
loans  based  upon  the  good  faitli  and  honor  of  these  foreign  Governments— loans 
which  will  ultimately  he  repaid  to  the  American  people.  Bui  as  we  must 
finance  these  loans,  they  are  an  integral  part  of  our  general  financial  opera- 
tions. To  raise  thirteen  to  fourteen  billions  of  dollars  on  or  before  the  30th 
June,  1918,  by  the  sale  of  bonds  in  recurring  installments  seems  to  some  people 
an  impossible  task.  It  is  a  stupendous  undertaking,  hut  it  is  not  impossible  for 
America.  It  is  not  easy,  but  it  can  be  done.  Our  resources  are  adequate;  our 
will  is  perfect;  our  spirit  is  Indomitable;  and  our  success  is  certain.  We  have 
only  to  pull  together — bankers,  lawyers,  doctors,  manufacturers,  farmers,  wage 
earners,  laborers,  men  and  women  alike,  Girl  Scouts  and  I'.oy  Scouts,  and  every 
Other  classes  of  our  people-  and  we  can  do  the  Job.  Already  we  have  demon- 
strated what  a   united  people  can  do  when   partisanship   is   subordinated   to 


10  THE   SECOND   LIBERTY    LOAN. 

patriotism;  when  love  of  country  becomes  supreme.  I  look  forward,  therefore, 
with  confidence  to  the  success  of  the  recurring  campaigns  we  must  make  for  the 
s.-ileof  Liberty  Bonds,  and  I  am  comforted  by  the  reflection  that  the  Government 
lias  the  solid  and  unswerving  support  of  the  patriotic  men  who  compose  the 
American  Bankers'  Association. 

THE  BONDS   OF   THE   SECOND   LIBERTY   LOAN. 

'I'lic  new  bonds  bear  4  per  cent  interest  and  are  exempt  from  all  State, 
municipal,  and  local  taxation,  except  estate  and  inheritance  taxes,  and  all 
federal  taxes  except  superincome  taxes,  excess-profits  taxes,  and  inheritance 
taxes.  They  are  convertible  into  another  issue  of  bonds,  if  authorized  by  the 
Congress,  bearing  a  higher  rate  of  interest  than  4  per  cent.  1  shall  not  enter 
into  the  details,  because  Treasury  circulars  and  regulations  will  explain  them 
fully.  1  do  desire,  however,  to  advert  briefly  to  the  taxation  feature  of  I 
bonds. 

The  first  Liberty  Bonds  bore  3£  per  cent  interest  and  were  exempt  also  from 
supertaxes.  These  bonds  did  not  make  the  widest  appeal.  To  be  successful 
with  recurring  issues  of  Liberty  Bonds,  it  is  necessary  that  they  should  appeal 
to  i  he  masses  of  the  people.  In  order  to  give  the  exemption  from  supertaxes 
on  the  first  Liberty  Bonds,  it  was  necessary  to  make  the  rate  of  interest  corre- 
spondingly Low.  'die  returns  show  that  of  the  4,000,000  subscribers  to  the  first 
Liberty  loan  3,960,000  subscribed  in  amounts  of  $10,000  and  less.  The  aggregate 
of  such  subscriptions  was  approximately  $1,300,000,000,  or  62^  per  cent  of  the 
first  offering.  To  most  of  these  subscribers  exemption  from  the  supertaxes  was 
of  no  value,  or  in  any  case  of  little  value,  whereas  to  the  40,000  subscribers  who 
bought  large  blocks  of  Liberty  Bonds  the  exemption  from  the  supertaxes  gave 
an  undue  advantage.  In  order  that  they  might  have  this  advantage,  the  small 
holder  was  obliged  to  receive  a  lower  rate  of  interest.  L  was  estimated  that 
under  the  pending  House  bill  the  exemption  from  supertaxes  would  make  a  3£ 
per  cent  Liberty  Bond  in  the  hands  of  a  man  with  a  Large  Income  equivalent 
to  a  taxable  bend  bearing  9&  per  cent  interest  per  annum  for  that  part  of  his 
income  in  excess  of  $::, 000,000.  The  inequality  of  this  plan  is  obvious.  L 
at  naught  the  principle  now  firmly  grounded  in  our  national  policy,  that  gradu- 
ated taxes  shall  be  laid  upon  wealth  in  order  that  the  burden  of  taxation  may 
be  equitably  distributed  and  made  to  bear  more  heavily  upon  the  rich  than  upon 
the  poor.  No  one  now  challenges  the  correctness  of  this  principle.  It  is,  there- 
fore, essential  that  Government  bonds  should  be  issued  upon  a  basis  which  will 
be  equally  just  to  the  poor  man  and  the  rich  man,  so  that  each  may  pur- 
chase these  bonds  upon  practically  the  same  interest  basis  after  allowing  for 
the  different  scales  of  taxation.     The  present  law  accomplishes  that  object. 

It  should  be  borne  in  mind,  moreover,  that  if  the  Government  should  con- 
i  ue  to  exempt  from  supertaxes  bonds  issued  during  this  war.  tlie  time  would 
come  when  there  would  be  created  in  this  country  a  class  of  people  of  great 
wealth,  enjoying  great  incomes  wholly  free  from  tax  burden.  A  grave  risk 
would  be  invoLed  in  such  a  policy.  It  would  be  fraught  wuth  great  danger  to 
the  State  and  would  be  well  calculated  to  produce  disconte;it  with  tax  burdens 
falling  thus  heavily  on  the  many  to  the  exclusion  of  the  few. 

For  the  purpose  of  illustration,  let  us  suppose  that  the  war  continues  so 
long  that  $20,000,000,000  of  bonds,  bearing  4  per  cent  interest,  should  be  out- 
tding,  and  that  they  were  exempt  from  all  taxation,  including  supertaxation. 
Tl  interest  charge  on  these  bonds  would  be  $800,000,000  per  annum,  almost 
as  much  as  the  entire  expenses  of  the  Government  at  the  outbreak  of  this 
v. ;.  .  Let  us  suppose  that  half,  or  $400,000,000,  represented  the  exemption  from 
ill]  ertaxes  which  was  accorded  to  people  of  great  wealth.     Bear  in  mind  that 

am  taking  arbitrary  figures  merely  for  the  purpose  of  illustration.  This 
.<XX),000  would  have  to  be  raised  by  taxation  upon  the  masses  of  the  people; 
■  her  words,  they  would  have  to  be  taxed  directly  in  order  that  the  $400,- 
000,000  of  lax  exemption  could  be  accorded  to  the  people  of  great  wealth  who 
bought  the  Liberty  bonds.  This  is  manifestly  unfair,  because,  although  the 
total  exemption  affects  more  or  less  the  price  for  which  the  bonds  may  be  sold 
for  the  United  States,  yet  no  adequate  return  can  be  had  for  it.  We  can  not 
sell  bonds  in  billions  on  the  basis  of  what  they  may  be  worth  to  the  very  rich. 
They  must  be  offered  to  all  the  people  alike  at  one  price,  aud  should  appeal  to 
all  alike  and  upon  equal  terms.  The  result  of  selling  a  bond  which  bears  a  low 
rate  of  interest  and  carries  exemption  from  graduated  aud  superincome  taxes 
will  be  this :  The  poor  and  the  people  of  modest  means  will  buy  them  for 
patriotic  reasons,  but  will  be  unable  to  hold  them,  because  the  return  is  too 


THE   SECOND   LIBERTY    LOAN.  H 

mall,     it   will   be  loss  Own   they  eon  get   from  bunks  of  deposit  or  savines 
banks,  :iini  the  tendency  will  be  ;iii  the  time  tor  these  bonds  in  be  pure! 
from  iiioni  and  accumulated  bj  the  very  rich  without  ans  adequate  considera- 
tion  moving  from   them  either  to  the  United   States  or  to  the  original   sub- 
scriber,    in  these  circumstances  the  ralue  of  the  tax  exemption  depend! 
upon  the  bonds  themselves,  btri  upon  :i  wholly  extraneous  fad    tin 
the  wealth  of  the  holder. 

Much  might  be  said  for  subjecting  the  bonds  to  norma]  Income  taxes  as  well 
;is  io  supertaxes.     Practical  considerations,  however,  make  such  a  . 
academic,     [f  the  bonds  were  not   exempt    from  normal   taxes   it    would  prob- 
ably be  necessary  to  offer  a  bigher  rate  of  interest  than  i  per  cent.    To  do  that 
would  involve  too  sudden  an  adjustment  in  the  markets  for  other  securities 
'     be  healthy,     it   is  important   that   the   United  stales,  iii  becoming 
borrower  of  money,  should  adjust    the  terms  of  Issues  in  such  a   wav 
avoid,  as  far  as  practicable,  any  break   in  the  general  market    for  secur 
':  apparent    thai    the    reasons   1    have   given,   which   are   COntTOlliD 

exemption  from  supertaxes,  apply,  if  at  all.  only  to  a  rerj   limited  extent  to 

exemption   from  Btamp  taxes  and  normal  income  taxes.     These  taxes  are  | 
upon  all  wealth  at  a  level  rate,  and  the  exemption  carries  approximately  i 
value  to  every  bondholder,  rich  and  poor  alike.    There  is  a  very  natural  f< 
that   the  holder  of  a   United,  states  bond  ought  not   to  be  harassed  by  little 
taxes  and  returns  incidental   to  iis  ownership.     The  United  Stales  ought   I 
able  to  get  lull  value  tor  exemption  from  such  normal  and  Btamp  taxes  in  the 
price  and  interest  rate  at  which  it  will  be  able  to  sell  its  bombs.    The  bonds  will, 
of  course,  continue  to  be  exempt  from  all  State  and  local  taxes  throughout 
the  United  Slates. 

CON VEB SION   PRl vi  leg i :. 

If  a  subsequent  series  of  bonds  bearing  interest  at  a  higher  rate  than  4  per 
cent  per  annum  should  be  issued  by  the  United  Stat  ihe  end  of  the 

then  the  holders  of  these  bonds  will  have  the  privilege,  at  their  option,  at 
time  within  six  months  after  such  issue  is  made,  of  converting  their  boi 
par  into  bonds  bearing  the  higher  rate  of  interest  at  the  price,  not  less  than  par. 
at   Which    the   bonds   bearing   interest   at   the   higher   rate   shall    be   offered   for 
subscription  to  the  public.     Of  course,  bonds  bearing  interest  at  a  higher  rate 
than  4  per  cent  can  not  be  issued  without  further  legislation  by  Congress,  and 
if  such  an  issue  should  be  authorized,  not  only  the  interest  rate  but  also  the 
general  character  of  the  bonds  will  be  determined  by  Congress  or  by  the 
retary  of  the  Treasury  under  the  authority  of  an  act  of  I 
holders  of  the  4  per  cent  bonds  will  be  entitled,  if  they  wish  to  do  so,  to  re 
bonds  of  the  character  so  determined,  except    that  the  bonds  issued  to  them,   if 
they  exercise  the  privilege  of  conversion,  will  have  the  same  date  of  maturity. 
the  same  interest  dates,  and  the  same  date  for  redemption  before  maturity  as 
the  4  per  cent  bonds  now  offered.     If  this  new  conversion  right  arises  it  must 
be  exercised  within  the  period  prescribed  by  the  Secretary  of  the  Treasury  or  ii 
will  come  to  an  end.    The  object  of  this  privilege  of  conversion  is  to  place  the 
investor  in  4  per  cent  Liberty  bonds  in  a  position  of  substantial  equality  with 
the  purchaser  of  bonds  of  the  next   issue  at    a    higher  rate,   if  any  be  made — 
not  to  give  hint  a  position  of  superiority  from  which  he  might  pick  and  choose 
between    various   bargains   which    from   time   to   time   might   be   offered  by   the 
United  States  during  the  course  of  the  war.     If  the  new  bonds  Into  which  con- 
version  is  made  carry  also  a  conversion  privilege,  then   that   privilege  may   be 
exercised   with   respect  to  a   Subsequent    issue  at    Ihe  holder's  option. 

These  provisions  for  conversion  are  substantially  determined  by  the  act  of 
Congress  recently  approved  by  the  President,  and  under  which  the  bonds 
offered  for  subscription,  of  course,  this  act  of  Congress  does  aol  affect  in 
any  way  the  rights  of  the  holders  of  the  34  per  cent  Liberty  bonds  of  the  first 
issue.  Their  rights  were  fixed  by  the  previous  act,  and  by  ihe  terms  of  the 
circular  offering  these  bonds  for  subscription,  and  by  the  terms  of  the  bonds 
themselves.  They  may  convert  their  bonds  Into  new  4  per  cent  bonds  just  like 
tho.e  now  being  Offered  for  Subscription,  except  that  the  bonds  issued  upon 
such  conversion  will  have  the  same  maturity  of  principal  and  interest  and 
redemption  date  as  ihe  old  3£  per  cent  bonds,  or  they  may  keep  their  :u  per 
cent   bonds  if  they  prefer. 

The  old  law  under  which  the  3*  per  cent  Liberty  bonds  are  issued  differs 
in  one  respect  from  the  new  law  under  which  tin-  I  per  oenl  bonds  are  issued. 
The  holders  or  the  3*  per  cent  bonds,  while  they  musl  exercise  me  privilege  of 
conversbm  into  the  4  per  cent  bonds  within  the  period  of  aix  months  beginning 


12  THE    SECOND    LIBERT V    LOAN. 

November  L5,  If  they  desire  to  exercise  it  al  all,  would  have  the  right,  if  sub- 
sequently  bonds  should  be  issued  at  a  still  higher  rate,  say  4*  per  cent,  again 
for  a  period  of  six  months  beginning  at  the  date  of  the  issue  of  those  bonds,  to 
convert  their  bonds  into  4%  per  cent  bonds,  even  though  they  had  not  made  an 
intermediate  conversion  into  the  4  per  cent  bonds.  This  arrangement,  resulting 
from  the  language  of  the  old  law,  seemed  to  Congress  and  to  the  Treasury 
Department  to  be  rather  more  than  fair  to  the  old  bondholders  and  to  carry 
with  it  burdens  Of  administration  and  difficulties  in  connection  with  the  future 
financing  of  the  United  States  which  ought  not  to  be  repeated. 

AN   INVESTMENT  OF   MATCHLESS   CHARACTER. 

Tt  has  been  urged  upon  me  that  many  men  of  wealth  will  refuse  to  buy  the 
4  per  cent  bond  with  liability  to  superincome  taxation.  I  should  be  loath  to 
believe  this;  but  if  it  is  true,  the  position  of  the  Government  must  always  lie  to 
offer  a  bond  upon  terms  fair  and  equitable  to  all  alike  and  which  will  make  the 
widest  possible  appeal  to  all  the  people  without  regard  to  the  extraneous  fact 
that  a  man  may  be  poor  or  rich.  The  Government  can  not  finance  tins  war  by 
making  an  appeal  alone  to  the  rich,  nor  to  the  man  of  moderate  means,  nor  to 
tin-  poor.  Its  appeal  must  be  to  all  the  people,  and  all  the  people  must  respond 
to  that  appeal  and  by  united  effort  sustain  the  Government  in  these  great 
credit  operations.  It  has  been  suggested  to  me  that  patriotism  should  play  no 
pari  in  the  sale  of  Government  bonds.  I  do  not  concede  this,  although  I  believe 
that  the  American  people  will  buy  these  4  per  cent  Government  bonds  on  their 
merits.  Patriotism  is,  first,  love  of  country  above  everything — above  life  itstdf ; 
se<- nid.  love  of  country  combined  with  that  vital  interest  in  the  Nation's  w< 
and  safety  which  will  make  secure  the  material  interests  of  each  individual  and 
promote  his  happiness  and  prosperity. 

If  this  is  true,  the  man  of  wealth,  with  patriotism  or  with  modified  patriot- 
ism or  without  patriotism,  has  a  greater  stake  in  the  security  of  Oovernment 
than  any  other  class,  because  if  the  Government's  credit  is  destroyed  and  dis- 
aster comes  upon  the  country,  as  it  inevitably  will  if  the  Government's  credit 
fails,  what  is  property  worth  to  the  rich  man,  what  is  life  worth  to  the  free 
man?  By  buying  Government  bonds  the  rich  man  obtains  the  safest  investment 
in  the  world  and,  at  the  same  time,  by  helping  to  sustain  the  national  credit, 
promotes  the  national  safety  and  makes  property  secure. 

But  upon  the  merits  of  the  investment  the  man  of  wealth  secures  in  a  Gov- 
ernment bond,  subject  even  to  the  supertaxes,  an  investment  of  matchless 
character.  His  principal  is  safe  beyond  peradventure.  Neither  storm  nor 
stress  can  shake  it.  Its  market  value  is  the  same  in  every  State  in  the  Union ; 
it  is  exempt  from  taxation  in  every  State  in  the  Union  and  not,  as  in  the  case 
of  State,  mi  ncipal,  or  local  bonds,  only  in  the  State  of  issue;  it  pays  an 
adequate  return;  it  is  convertible  into  another  bond  bearing  a  higher  rate  of 
interest  during  the  war  with  Germany.  What  could  be  more  liberal  to  the 
investor?  I  know  of  no  instance  where  a  bond  has  been  issued  by  a  State,  or 
ar.y  political  subdivision  thereof  in  the  United  States,  or  by  any  private  cor- 
poration, which  gave  to  the  investor  the  opportunity  of  converting  that  bond 
into  a  subsequent  issue  of  bonds  at  a  higher  rate  of  interest.  There  may  be, 
but  I  am  not  aware  of  it. 

The  question  naturally  presents  itself  as  to  how  these  great  operations  of 
the  Govemmt  tt  are  to  be  financed.  They  can  be  financed  only  through  the 
united  support  of  all  the  people  of  the  United  States.  The  kind  of  support  I 
mean  is  that  every  individual,  every  partnership,  every  corporation,  shall 
invest  nor  o  1I3  their  available  means  from  time  to  time  in  Government  bonds, 
but  that  they  shall  make  sacrifices  of  comfort  and  convenience;  that  they  shall 
economize;  th  t  they  shall  avoid  waste;  that  they  shall  save  in  every 
iible  direction  in  order  that  they  may  increase  their  available  resources 
for  the  purpose  of  assisting  the  Government  in  these  prodigious  opera 
upon  which  the  national  security  absolutely  depends.  We  must  encourage 
thrift  and  industry  throughout  the  land,  and  we  must  make  everybody  under- 
stand that  the  first  duty  of  the  hour  in  this  critical  time  is  to  place  all  their 
available  resources  at  the  disposal  of  the  Government. 

THE    RESOURCES    OF    AMERICA. 

Fortunately  the  resources  of  America  were  never  so  ample  for  ourselves  and 
so  formidable  for  our  enemies  as  now.  The  value  of  our  farming  and  agri- 
cultural products  for  the  year  1917  is  the  greatest  ever  recorded.     In  a  state- 


THE   SECOND    LIBERTY    LOAN.  13 

merit  I  have  just  received  from  the  Secretary  of  Agriculture  he  estimates  the 
value  to  i»"  $17,000,000,000.    The  combined  resources  of  the  National  and  - 
banks  (including  trusl  companies)  of  the  United  States  are  now  $37,000,000 
At  the  outbreak  of  the  <"i\ii  War  the  * •< •  1 1 1 1 > i 1 1* -< I  resources  of  the  banks  were 
estimated  to  be  $1,500,000,000  I  with  these  limited  banking  resources  the 

Union  Government   raised  $3,000,000,000  by   bond  sale-,  or  twice  the  amount 
of  the  banking  resources  of  the  country.     Upon  the  same  basis  we  Bhould  now 
be  able  to  raise  $74,000,000,000  through  Government  loans.    J  am  i 
that  this  may  be  <l"iic;  i  am  only  drawing  a  comparison. 

in  < D.ection  with  the  resources  of  the  Dnlted  States  and  the  sale  of  0 

bonds,  I  wish  to  say  that  the  money  derived  from  the  sale  of  these  secur 
the  money  derived  from  taxation.  Including  even  the  money  we  lend  t<>  for 
Governments,  Is  largely,  If  not  wholly,  spent   within  the  limits  of  the  United 
states;  only  a  small  fraction  of  it  Is  expended  iii  any  other  direction.    T 
operations  involve  in   very  considerable  measure  merely   transfers  of  cr< 
and  the  proceeds  of  these  bonds  are  rapidly  being  sent  back  Into  the  channels 
of  business  for  the  purpose  of  promoting  and  enhancing  the  prosperity  of  the 
people  of  the  United  states. 

There  lias  been  much  speculation  as  to  what  are  the  annual  savings  In  the 
United  states,  as  to  whether  or  not  they  are  large  enough  to  lands 

Of  the  Government  In  this  war,  and  as  to  how  much  will  he  left   after  the  D 
of  the  Government  are  satisfied,    t  have  myself  been  greatly  confused  by  the 
many  conflicting  estimates  and   theoretical   observations   with   which   I    . 
been  favored.    Recently  there  was  placed  in  my  hands  an  Interesting  and  illumi- 
nating paper  on  this  subject  by  Col.  M.  W.  Thompson,  now  in  charge  of 
Finance  Division  of  the  Signal  Corps  of  the  United  States  Army.    The  argu- 
ment and   the  figures  arrayed  hi  this  statement  are  impressive.     I  quote  two 
I  i-aphs  therefrom  : 

"Careful  Investigation  of  the  present  available  supply  of  capital  suggests  the 
conclusion  that  the  present  needs  of  the  Government  may  be  adequately  met. 
and  that  the  entrance  of  the  Government  into  the  market  as  a  competitor  for 
capital  need  not  prevent  necessary  expansion.  The  needs  of  the  country  must 
be  and  will  be  first  served,  but  there  will  be  sufficient  capital  left  for  industrial 
purposes.  Patriotic  response  to  the  needs  of  the  country  need  not  force  bankers 
into  a  policy  of  retrenchment.  Those  conclusions  are  striking.  Indeed,  they 
are  at  variance  with  the  general  attitude  of  financiers,  but  they  are  soundly 
based  upon  accurate  statistical  information. 

"In  a  normal  year,  savings  from  all  sources  in  the  United  States,  from 
corporations,  business  men,  farmers,  and  investors  generally,  amount  to  from 
$5,<  1(10,000,000  to  $6,000,000,000.  In  1916  the  supply  of  capital  in  the  United 
States  was  about  two  and  a  half  times  the  normal  amount.  In  thai  year  sav- 
ings in  this  country,  Including  those  reinvested  by  corporations  in  their  own 
enterprises,  amounted  to  $15,000,000,000.  Conservative  estimates  for  the  cur- 
rent year  indicate  that  the  aggregate  for  1917  available  for  the  use  of  the 
Covernment  in  prosecuting  the  war  and  for  the  general  purposes  of  financing 
industry  may  reach  $18,000,000,000." 

I  have  not  had  opportunity  yet  to  study  the  elaborate  tables  and  the  argument 
which  have  been  submitted  to  me  in  support  of  these  conclusions,  but  I  have 
examined  them  sufficiently  to  convince  me  that  they  are  worthy  of  deep  study. 
I  am  greatly  indebted  to  Col.  Thompson  for  the  service  he  has  rendered  in  mak- 
ing this  analysis,  and  for  the  privilege  he  has  given  me  of  making  use  of  it.  I 
hope  to  be  able  to  publish  Col.  Thompson's  statement  in  the  near  future. 

Whatever  differences  of  view  there  may  he  about  the  annual  savings  of  the 
American  people,  it  is  undoubtedly  true  that  they  are  so  large  that  with  the 
other  resources  of  the  country  upon  which  we  may  draw,  there  can  be  no  doubt 
whatever  of  the  ability  of  the  people  of  the  United  Slates  to  finance  every  de- 
mand which  the  Government  may  make  upon  them  for  the  purposes  of  this  war. 
If  the  ordinary  savings  which  have  been  made  heretofore  voluntarily  are  now 
augmented  by  the  savings  which  can  be  effected  under  the  pressure  of  patri- 
otism and  necessity,  by  prevention  of  waste,  the  practice  Of  genuine  economy. 
the  cutting  off  of  luxuries  during  the  period  Of  this  war.  what  may  not  the 
American  people  bo  able  to  do?  No  one  can  gauge  the  latent  power  Of  the  peo- 
ple <>f  the  United  States  in  that  respect.  Already  the  country  is  aroused  to  the 
importance  of  the  situation,  and  there  is  a  spirit  of  determination  and  co- 
operation throughout  the  land  which  augurs  well  for  the  success  of  every 
financial  undertaking  of  the  Government,  and  for  the  continued  maintenance  of 
our  industrial  and  commercial  situation  unharmed  and  unimpeded  by  the  essen- 


451U 


14  THE    SECOND    LIBERTY    LOAN. 

tial  financial  operations  of  the  Government.  This  sounds  at  variance  with 
what  I  am  going  to  say  subsequently  about  the  necessity  of  stopping  unnecessary 

i  apital  expenditures  during  the  war,  but  it  is  not.  That  action  is  none  the  less 
desirable,  because,  as  ;i  matter  of  prudence  and  Of  wisdom,  we  should  conserve 
the  resources  of  the  Nation  in  every  possible  direction. 

WAR    SAVINGS    CERTIFICATES. 

In  the  matter  of  savings,  which  are  of  such  prime  importance,  the  Treasury 
proposes  to  issue  in  the  near  future  and  to  sell  to  the  people  war  savings 
certificates  in  as  .small  denominations  as  $5,  maturing  in  five  years,  and  upon 
such  a  reasonable  plan  that  the  humblest  person  in  the  land  may  be  encouraged 
to  save  all  that  he  can  and  to  invest  in  an  absolutely  safe  security  bearing 
interest,  while  at  the  same  time  doing  his  part  to  sustain  the  Government  aud 
help  win  the  war.  I  have  appointed  a  War  Savings  Committee  to  take  charge, 
under  the  direction  of  the  Secretary  of  the  Treasury,  of  this  important  branch 
of  the  work.  This  committee  consists  of  Messrs.  Frank  A.  Vanderlip,  chair- 
man ;  Frederick  A.  Delano,  of  the  Federal  Reserve  Board;  Henry  Ford,  of 
Detroit;  Charles  L.  Baine,  of  Boston;  Eugene  Meyer,  of  New  York;  and  Mrs. 
Elizabeth  Bass,  of  Chicago.  It  will  not  be  possible  to  offer  the  war  savings 
certificates  during  the  forthcoming  liberty  loan  campaign,  but  as  quickly  as 
certificates  will  be  made  available  for  the  people  of  the  country 
through  the  post  offices,  internal-revenue  offices,  customs  offices,  the  banks, 
■iicies  that  may  be  designated  by  the  Government. 

The  value  of  this  campaign  for  war  savings  certificates  is  nol  alone  in  the 
amount  of  money  that  may  be  saved,  but  in  teaching  the  people  of  the  United 
States  on  a  nation-wide  scale  and  through  an  intelligent  presentation  of  the 
tacts,  the  value  of  thrift  and  saving.  Its  beneficial  effects  ought  to  survive 
the  war  and  have  a  permanent  influence  upon  the  future  economy  of  the 
country. 

Upon  the  bankers  rests  a  peculiar  duty  and  responsibility  at  this  time. 
They  can  render  inestimable  service,  not  alone  in  promoting  savings,  but  also 
in  exercising  a  wise  discrimination  as  to  loans  involving  new  capital  expendi- 
tures and  in  discouraging  every  unnecessary  undertaking  involving  fixed  in- 
vestments until  after  the  close  of  this  war.  We  must  realize,  my  fellow  country- 
men, that  the  gravity  of  the  situation  for  the  Nation  and  for  the  entire  world 
is  so  impressive  that  the  Government  must  preempt  and  occupy  exclusively, 
if  necessary,  until  this  war  is  over  the  entire  investment  field  in  the  United 
States. 

THE   CONSERVATION    OF   FINANCIAL   RESOURCES. 

It  should  be  the  first  duty  of  every  citizen  to  invest  gladly  his  available 
means  in  Government  bonds,  and  it  should  be  the  duty  of  the  patriotic  governors 
of  oar  States,  the  mayo  s  of  our  cities,  and  the  controlling  authorities  in  every 
political  subdivision  in  the  country  to  discontinue  unnecessary  public  works 
and  improvements  until  this  war  is  over.  Private  enterprise  should  be  governed 
by  the  same  principle.  I  do  not  mean  to  have  you  infer  that  this  is  a  de 
suggestion  that  an  immediate  attempt  be  made  upon  any  organized  scale  to 
discourage  unnecessary  capital  expenditures ;  but  I  do  wish  to  urge  that  you, 
the  bankers  of  America,  make  a  deep  study  of  this  question  so  that  if  the  time 
comes  when  it  is  desirable  to  take  action,  you  will  be  prepared  to  cooperate 
quickly  with  the  Governi    snt 

It  should  be  remembere  that  the  National  Government  has  no  power,  through 
legislation,  to  regulate  or  control  capital  expenditures  of  States,  municipalities, 
or  political  subdivisions  of  Slates,  nor  has  it  the  power  to  legislate  with  regard 
to  such  investments  by  private  corporations,  except  those  engaged  in  interstate 
commerce.  Through  the  •  ooperation  of  the  States,  effective  measures  could  in 
time  be  concerted,  no  doubt,  to  meet  this  question  if  the  necessity  arises.  But 
that  would  take  time.  In  the  absence  of  State  action  it  is  possible,  however. 
for  the  bankers  of  the  country  to  discourage,  to  a  very  great  extent,  unnecessary 
or  unwise  investment  of  capital  in  private  and  public  enterprise?  during  the 
period  of  this  war.  I  hope  that  this  association  will  appoint  a  committee  to 
study  this  problem  and  be  prepared  to  act  as  the  public  interest  may  require. 

It*  is  also  a  matter  of  great  importance  that  the  bankers  of  America  shall 
conserve  their  own  resources,  having  always  in  mind  the  supreme  necessities 
of  the  State,  so  that  they  may  be  able,  as  the  first  bulwark  of  the  Government'.". 
credit,  to  respond  quickly  and  effectively  to  any  calls  the  Government  may  make 
upon  them.     In  this  connection  it  is  most  important,  gentlemen,  that  interest 


STATE  NORMAL  SCHOOl 


rilF.    SECOND    LIBERTY    LOAN.  15 

ratal  should  be  kept  at  ;i  reasonable  level  throughout   the  country,  that  suffi- 
cienl  expansion  of  credll  should  be  bad  to  carry  on  the  great  commercial 
industrial  operations  of  the  Nation  and  to  assist  in  the  flotation  of  suece 
Issues   of   Government    bonds.     Proper   credit    expansion    at    this 
tremely  essential  to  the  Government  in  this  war — and  1  emphasize 
and  y.ui  men  of  knowledge,  ability,  and  experience  are  the  best  Judge*  of  tiiar. 
Proper  credit  expansion  la  Jusl  as  essential  to  carrying  these  greal  opei 
forward  as  food  is  oecessary  for  human  life.     Von  nnisi  not  be  afraid  o 
oust  not  be  afraid  to  break  old  dogmas;  we  must  nol  i><-  afraid  I     i 
9  that  arc  manifestly  Bound  things;  we  must  not,  gentlemen— if  you  will 
permit  me  to  assume  for  a  moment  that  I  am  a  banker— we  must  not  hug  this 
poor  dogma  of  do!  rediscountlng  when  it  is  essential  that  banks  should  r< 
count  to  carry  forward  the  legitimate  operations  of  the  war.     \ 

er  wanl  to  keep  himself  in  a  vise  when  your  Government  and  yon  have 
framed  the  law  which  gives  you  the  opportunity  of  making  disaster  impos 

TBEAsiky    (  }  i:  oi     INDEBTEDNESS. 

I  should  like  to  Impress  upon  you  the  Importance  of  a   prompt   and  wide- 
spread response  on  the  pari  of  the  bankers  of  the  United  states  to  the  i 
imrs  of  short-time  Treasury  certificates  which  will  be  made  from  time  to  time. 
e   certificates,   as   you    know,   have   maturities  of   from    thirty   days    to   four 
months,  and  are  sold  in  anticipation  of  bond  offerings  and  the  paymen 
Through  their  use,  the  necessities  of  the  Government  during  the  intervi 
tween  recurring  bond  issues  arc  met,  and  the  process  of  financing  these  bond 
issues  is  not    only   eased   but  simplified.     Undue  strain   upon    the  credi 
sources  of  the  country  is  avoided  because  payments  are  spread  over  a  period 
and  adjusted  in  such  a  way  as  to  prevent  disturbance  and  inconvenience.     The 
banks  can  render  highly  valuable  and  patriotic  service  to  the  Government  by 
purchasing  promptly,  and  to  the  extent  required,   these  Treasury   certifl 
as  offered. 

THE    GREAT    VALUE   OF   THE    FEDERAL    RESERVE    SYSTEM. 

We  are  fortunate  in  having  the  Federal  Reserve  System,  whose  usefulness 
is  now  becoming  increasingly  manifest.  This  system  is  demonstrating  every 
day  its  tremendous  importance  and  value  to  the  banks  and  to  the  American 
e.  It  not  only  gives  strength  and  security  to  our  financial  structure,  but 
it  offers  the  essential  means  of  legitimate  credit  expansion  and  flexible  note 
issues,  for  which  the  country  has  so  long  stood  in  dire  need.  This  system  has 
already  won  the  approval  of  the  bankers  and  people  Of  the  United  States.  I 
wish  that  the  State  banks  would  realize  I  opportunity  they  now  have 

of  promoting  their  own  interests  by  joining  the  Federal   Reserve  System,  and 
by  doing  so  to  make  that  great  system  more  impregnable  for  their  I  and 

ommon  interest  of  the  country.  It  would  consolidate  the  linancial  strength 
of  the  Nation  in  such  a  way  that  the  operations  of  the  Government  in  this  war 
could  not  be  put  in  question.  It  is  a  commanding  duty  of  self-interest  and 
patriotic  service  to  the  country. 

The  next  offering  of  the  Liberty  loan  has  just  been  announced.  The  amount 
000,000,00< ».  With  the  right  reserved  to  allot  50  per  cent  of  the  oven 
scription.  1  should  like  you  to  understand,  gentlemen,  thai  in  the  determina- 
tion of  the  amount  of  these  offerings  I  am  controlled  by  Inexorable  facts. 
These  facts  are  the  actual  necessities  of  your  Government.  I  do  not  determine 
these  questions  arbitrarily.  We  are  face  to  face  with  a  situation  where  the 
needs  of  the  < lovernmenl  must  be  met.  When  I  announce  the  amount  of  an 
offering  of  Liberty  bonds,  please  remember  that  it  is  the  minimum  with  which 
the  Government's  business  can  be  carried  on  and  the  war  effectually  conducted. 

It  is  the  first  duty  of  patriotism,  gentlemen,  that  the  needs  of  your  Govern- 
ment for  this  war  shall  always  he  met.  because  it'  you  fail  once,  disaster  will 
Overcome  the  entire  Nation,  and  we  can  not  contemplate  that.  I  should 
happier  if  the  loan  were  larger,  but  I  have  endeavored  to  make  it  as  small  as 
possihle  in  order  that  the  least  possible  strain  may  lie  put  upon  the  country's 
resources  during  the  crop-moving  season. 

Tilt:  SECOND  I  D3ERTV  LOAN  MUST  BE  A   - 

We  must  make  this  loan  a  success.  We  can  make  it  a  success.  The  failure 
of  a  Single  issue  of  Government  bonds  would  be  worse  for  America  than  a  dis- 
aster upon  the  field  of  battle.    We  must  never  let  that  happen. 


16  THE    SECOND    LIBERTY    LOAN. 

A  few  days  ago  T  read  the  following  manifesto  issued  in  Berlin  by  the  League 

of  German   .Municipalities: 

"If  money  talks,  the  President  of  tlic  United  States  may  learn  by  October  18, 
when  the  subscription  lists  close,  thai  the  echo  of  the  new  war  fund  given  by 
the  German  people  will  have  drowned  out  completely  the  clamor  of  unending 
protests  to  which  his  reply  to  the  Tope  has  given  stimulus." 

Let  us  meet  that  challenge  by  a  subscription  to  our  Second  Liberty  Loan  on 
the  27th  day  of  October,  nine  days  after  the  close  of  the  German  loan,  which 
will  make  clear  to  the  German  military  despotism  that  America  marshals  not 
alone  her  brave  soldiers  upon  the  held,  her  invincible  Navy  upon  the  high  seas. 
her  industries  throughout  the  length  and  breadth  of  this  land,  but,  as  well, 
her  financial  resources,  and  that  she  is  determined  to  use  them  all  without 
stint  and  regardless  of  sacrifice  to  vindicate  American  rights,  outraged  too  fre- 
quently by  German  infamies.  Let  us  answer  this  challenge  by  making  Hear 
to  the  world  that  the  American  people,  with  transcendent  love  of  justice  and  of 
country,  stand  solidly  behind  their  great  President  and  support  unequivocally 
the  purposes  of  this  war. 

America's  responsibility. 

Fellow  countrymen,  we  are  at  one  of  those  great  points  in  the  progress  of 
civilization  where  pregnant  issues  for  the  whole  human  race  are  to  be  deter- 
mined. It  is  an  inspiring  thought  that  noble,  free,  peaceful,  and  liberty-loving 
America  has  been  called  by  God  to  powerfully  influence,  if  not  to  determine, 
the  course  of  future  events.  We  have  a  grave  responsibility,  and  I  know 
that  we  shall  discharge  it  worthily,  of  American  patriotism  and  American  ideal- 
ism. These  problems  are  of  unparalleled  novelty  and  magnitude.  The  means 
of  determining  action  must  frequently  be  more  instinctive  than  logical.  We  are 
traversing  unknown  and  uncharted  seas.  Our  compass  must  be  the  steadfast 
cooperation  of  the  best  wisdom  and  intelligence  of  the  country,  inspired  by  a 
lofty  patriotism  which  neither  obstacles  can  discourage  nor  death  defeat.  Amer- 
ica's  sacred  rights  must  be  vindicated  ;  a  just  and  lasting  peace  must  be  es 
lished ;  democracy  must  be  triumphant;  despotism  must  be  destroyed;  and, 
when  these  great  things  have  been  accomplished,  everywhere  throughout 
length  and  breadth  of  the  civilized  world  men  shall  proclaim  noble  America 
as  the  valiant  knight  who  came  upon  the  scene  in  the  blackness  of  the  night 
and  rescued  civilization. 

o 


UNIVERSITY  ot  CALIFORNIA 
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